WSJ asks: Are brokerage accounts safe?

Discussion in 'Retail Brokers' started by freedinner, Jan 1, 2012.

  1. Certain inaccuracies and IMO misses the full extent of the problem, but this shows that the issue is getting more attention.

    http://online.wsj.com/article/SB100...?mod=WSJ_article_comments#articleTabs=article


    What we really need is a new, safe system.

    Segregation rules are not good enough and in any case a broker can (and during a struggle for survival more likely will) circumvent them.

    In the current system where all assets are held in "street name", shares are registered as the broker's ownership while a customer technically only has a claim against the broker. How crazy is that?

    This really benefits only the few large TBTF firms while all the others are prone to bank runs at the slightest whiff of rumor, destabilizing the financial system.

    We need a central, independent and third party asset register, ideally kept at the central clearinghouse, for all financial assets, that includes information of the owner, the broker that the owner uses, and whether part or all of the asset is subject to a lien (a margin loan extended by the broker).